Coal. AXA still isn’t doing enough to divest.

Despite its policy aimed at a reduction in funding support for fossil fuel energy and some last-minute announcements, insurance firm AXA remains under fire from NGOs, including Friends of the Earth France, who condemn their continued support to the development of new coal fired power plants.

In May 2015, a few months before COP 21, the French insurance firm AXA announced that it would be divesting in businesses generating over 50% of their revenue from coal related commerce. Consequently, it became the first global corporation to reach that milestone, and to respond to demands for the removal of coal from finance. It has been two years since the conference in Paris. The insurance firm was undoubtedly responsible for initiating the movement, however it has since been surpassed by other investors such as the German group Allianz, who have adopted policy limit of 30%. That was enough cause for several NGOs, including Friends of the Earth France, to speak out on Tuesday - the day before the group’s general assembly - to accuse AXA not only of not going far enough in its policy of divestment, but also of continuing to support the construction of new power plants through alternative methods. According to these NGOs (Greenpeace Switzerland, Re:Common, Sierra Club, The Sunrise Project, urgewald), the 50% limit put in place by the insurance firm is still too high and would permit, under the guise of "greenwashing", the support of businesses who are planning the construction of new coal fired power plants. Take, for example, the large groups in which investments are negligible in percentage but represent considerable sums. "Take the case of KEPCO for instance, the largest electricity company in South Korea, responsible for the production, transport, and distribution of electricity. It derives 46% of its revenue from coal and therefore avoids the exclusion of AXA, who re-invested more than 90 million dollars in the company in 2016." explains Lucie Pinson, private Finance Officer of Friends of the Earth France.

To respond to its critics before the general assembly, the French insurance firm announced Tuesday a step forward with its subsidiary AXA Investment Managers (AXA IM), a world leader in asset management. In an announcement published to its online community, it explained its desire to spread its coal divestment policy to third-party accounts who have accepted it. This divestment would represent, according to the firm, around 177 million euros in debts and shares, which adds to the 500 million euros of its own funds already withdrawn by AXA from the coal industry since May 2015.

NGOs want to go even further

Good news, applauded the Friends of the Earth campaign Finance Officer despite everything. "Not applying one’s policy to all managed assets is incoherent... Therefore we approve of this measure which constitutes a first among the big insurance firms. However, we regret that it applies only to AXA IM and not to Alliance-Bernstein, the other asset management subsidiary of AXA which manages 41% of the group’s accounts.” Elsewhere, the NGOs would like to push the envelope even further and consider important factors hidden under the rug. "In terms of the ultimate risk management in our firms, AXA and other insurance firms must not only cease to invest but also cease to insure businesses who continue to develop this combustible fuel which remains a threat to humanity. Meanwhile, at the heart of the European Union, the French insurance giant continues to invest in businesses that are planning new coal power plants." explains Lucie Pinson, not lacking examples. " AXA continues to invest in businesses such as German RWE or Enea group, controlled by the Polish state, which generate less than 30% of their revenue from coal but produce over 60% of their electricity from this source of energy. For electricity providers, the criteria must be the percentage of electricity generated from coal, and not sales revenue. Yes, the NGOs agree unanimously that, "We must obligate AXA, as well as insurance firms in general, to stop assisting even the smallest business who profits, consumes or sells over 20 million tons of coal per year."

Faced with all these critics, the French group defends its policy and the efforts it made. "The report is incomplete. The NGOs only see the small picture. The divestment in coal is only a small part of the fight against climate change. Our goals are more ambitious and a lot bigger. Along with divestment, we have engaged the investment of three billion euros in green bonds and green infrastructure from now until 2020. We are prepared to discuss the criteria." explained a speaker for the insurance firm, who therefore is not shutting the door. Could this indicate changing times?